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ValueAct May Push for Baker Hughes Breakup

After Halliburton (HAL - Get Report) announced in 2014 that it was seeking to acquire Baker Hughes (BHI - Get Report) in a blockbuster $35 billion acquisition, activist investor ValueAct Capital Partners acquired significant stakes in both energy companies and pushed privately for the deal to be consummated.

However, emails revealed in a Justice Department lawsuit against ValueAct last month suggest that the activist hedge fund overseen by co-founder Jeff Ubben contemplated a Plan B for Baker Hughes in the event the deal fell apart - pushing to break up the energy company. It's possible that ValueAct could seek to install one or more directors at the Houston, Texas-based company as part of that effort.

The possibility of a public activist campaign by ValueAct at Baker Hughes comes after the blockbuster merger was called off on Sunday, less than month after the Justice Department filed a civil antitrust lawsuit in the U.S. District Court in Delaware on April 6 seeking to block the deal.

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In addition, ValueAct reported April 22 -as the deal with Halliburton was unraveling -- that it had nearly doubled its stake in Baker Hughes from 5.1% to 9% by acquiring shares for between $47.01 and $47.24 between March 7 and March 22, 2016. The hiked stake - reported in an activist schedule 13D filing - suggests that ValueAct may be contemplating an expansion of its campaign at Baker Hughes.

On April 4, the Justice Department launched a lawsuit against ValueAct charging that it had failed to notify federal antitrust regulators about stakes valued at $2.5 billion that the activist fund began building in Halliburton and Baker Hughes soon after the two oil field services companies announced plans to combine.

In the Justice Department lawsuit filing, the agency revealed that...